from the times-change dept

Almost exactly a decade ago, for reasons I still don't quite understand, Microsoft invited me to sit down one-on-one with their then Deputy General Counsel for intellectual property, Horacio Gutierrez (who is now General Counsel at Spotify). It was, to say the least, a bizarre conversation in which he repeatedly tried to justify Microsoft's position on software patents, with us getting into a spirited debate over Microsoft's ridiculous FUD campaign about Linux. Suffice it to say, while the conversation was fun, we agreed on almost nothing. For a few years, Microsoft had been trotting out claims that Linux violated over 200 of its patents, and kept making these vague threats about it. It never named the patents in question. It never sued. It just kept obliquely warning that those who used Linux might somehow eventually face some patent infringement suits from Microsoft. Some might call this a patent chilling effect. Or FUD. Or a shakedown. No matter what you call it, I stand by the claim that it was despicable.

Partly in response to all this nonsense saber rattling by Microsoft, in 2005 a group of companies who relied heavily on Linux got together to create the Open Invention Network (OIN), which was designed as a giant patent pool, mainly to protect Linux. Basically, all the companies who join agree to license their patents freely for use in Linux (and Linux offshoots) to other members of the network. A large part of the reason for this was to allow various companies working on Linux to freely share patents among each other and protect them from Microsoft-style shakedowns. In 2009, OIN ended up buying a bunch of Microsoft patents for itself to help with its mission -- but here's part of what was amazing about that: Microsoft tried to block the sale, refusing to let OIN be a part of the bidding on those patents. Instead, OIN had to use a third party as a shell bidder so that Microsoft didn't know that OIN was trying to get those patents.

That's why the news last week that Microsoft had joined OIN and agreed to freely license all of its patents to every other member in the pool is so shocking. Microsoft's Erich Andersen, who now holds the role that Gutierrez held a decade ago, admitted quite frankly in his blog post about this decision that many will be surprised, but it represents a real "evolution" in the way Microsoft thinks about Linux. I would say that's an understatement.

We know Microsoft’s decision to join OIN may be viewed as surprising to some; it is no secret that there has been friction in the past between Microsoft and the open source community over the issue of patents. For others who have followed our evolution, we hope this announcement will be viewed as the next logical step for a company that is listening to customers and developers and is firmly committed to Linux and other open source programs.

Andersen notes that Microsoft has been making a number of moves along these lines lately, which is really good to see:

Joining OIN reflects Microsoft’s patent practice evolving in lock-step with the company’s views on Linux and open source more generally. We began this journey over two years ago through programs like Azure IP Advantage, which extended Microsoft’s indemnification pledge to open source software powering Azure services. We doubled down on this new approach when we stood with Red Hat and others to apply GPL v. 3 “cure” principles to GPL v. 2 code, and when we recently joined the LOT Network, an organization dedicated to addressing patent abuse by companies in the business of assertion.

I had missed that Microsoft also joined the LOT Network -- which is another creative attempt at stopping operating company patents from ending up with patent trolls (by enabling an automatic "license" should those patents be "transferred" to companies outside the network). This is another good step by Microsoft in rehabilitating some of the FUD and trolling activities that it had done in the past. Obviously, much of this is driven by the business realities of the the cloud market and Microsoft's relative position in these markets these days -- rather than some grand enlightenment about how abusive the company was with its patents in the past.

However, it should be recognized and applauded for what it is, which is an absolute step in the right direction. Maybe in another decade we'll be talking about how Microsoft is going even further and doing an Elon Musk style announcement that all its patents are available to anyone. Wouldn't that be something?

Google Inc. and MPEG LA, LLC announced today that they have entered into agreements granting Google a license to techniques that may be essential to VP8 and earlier-generation VPx video compression technologies under patents owned by 11 patent holders. The agreements also grant Google the right to sublicense those techniques to any user of VP8, whether the VP8 implementation is by Google or another entity. It further provides for sublicensing those VP8 techniques in one next-generation VPx video codec. As a result of the agreements, MPEG LA will discontinue its effort to form a VP8 patent pool.

Good news, but not the end of the story. Even though MPEG-LA had licensed technologies to Google, the big question was under what terms. Making VP8 available to users of free software was potentially a problem, since it is not possible in general for patented technologies to be licensed for use with open source programs: no per-copy fee can be charged, and necessary permissions must automatically be passed on with any copy that is made. In other words, for free software, licenses need to be not just royalty-free, but restriction-free. The concern was that the deal agreed between Google and MPEG-LA would preclude that.

Indeed, when Google finally published the draft version of its VP8 Patent Cross-license Agreement, some in the free and open source (FOSS) world found unusual elements that raised questions about its compatibility with standard FOSS licenses. This has prompted the Software Freedom Law Center -- one of the key points of reference for legal matters in the world of free software -- to offer the following comments addressing those concerns:

Critics focus on two provisions in particular: §2, which requires would-be licensees to explicitly accept the license terms, and §3, which limits the license's "field of use" to implementations of VP8. Both would be unacceptable in a FOSS copyright license on software, but in the context of this particular free-standing third-party patent license, neither provision interferes with FOSS licensing or the freedoms it protects.

Should the developers of a FOSS VP8 implementation accept this license, they would not be required to pass on any restrictions limiting users' rights to copy, modify, and redistribute free programs. Users would be neither required to accept the patent license nor restricted from adding new capabilities to the software. They would have the same rights as they would if the developers had never accepted the patent license: those granted by the software's FOSS license.

If this patent license interfered with the freedoms guaranteed to users by FOSS licenses, it would be incompatible with the OSD [OPen Software Definition] and FSD [Free Software Definition]. Because the patent license does not restrict those freedoms, but rather affords some new, limited protections to users and developers within the field of use, it improves on the current situation. Without this license, the patent holders would be in a position to threaten those users and developers as well as others.

Of course, that underlines that the real problem here is that holders of even vaguely-relevant patents might band together to threaten to sue the creators and users of new codecs, and thus act as a brake on innovation. Although the proposed Google license is a clever hack around that, what we really we need is a thoroughgoing revision of the system that allows such anti-competitive patent pools to be created at all.

from the as-they're-known-to-do dept

Stephan Kinsella alerted us to Petra Moser's latest research (along with Ryan Lampe). Moser has been doing some tremendous research into the patent system, much of it looking at evidence of what impact the patent system really has (or has not had) on innovation over the years. In the past, we've talked about her research showing that countries without patent systems often have just as much innovation as those with patent systems (contrary to what you might hear from patent system defenders). In this case, the research looks into the question of whether or not patent pools encourage innovation.

Patent pools tend to come about when you have a lot of patents in and around a particular product, creating "patent thickets" where a bunch of different patent holders all hold onto important pieces of the puzzle. The worst case scenario, then, is that nothing can get done, as it's impossible for anyone to innovate without being hit by a ridiculous number of lawsuits. To us, this is a sign of the patent system clearly not working. If so many different elements all need to be patented separately, then mistakes were made in the patenting process. You get, as Michael Heller has called it, a gridlock situation. Our solution? Throw out such patents, because they're clearly hindering, rather than enabling, innovation.

Others, however, have suggested that patent pools are a good solution to the problem. All (or, at least, many) of the players come together, and agree to share their patents in order to create products based on those patents with some sort of sharing of the eventual proceeds. In fact, IEEE is now working to encourage patent pools around IEEE standards. In the past, we've explained why we think patent pools create exactly the wrong incentives, but Moser and Lampe's research goes much further, finding that patent pools do, in fact, seem to limit innovation. They do this in a number of ways.

First, companies scramble to get patents that can be included in the patent pool (rather than focusing on actually innovating in the market and understanding what the market wants). Once the pool is truly established, patenting decreases, because it's just not worth it to compete. After the patent pool dissolves, then others finally get back into the market. Second, because the patent pool locks in the effective "standard" early in the process, it might not actually be the best technology. In their research, Lampe and Moser found that this is exactly what happened with the first patent pool concerning the sewing machine. It "shifted the direction of innovation to an inferior technology... which was known to be significantly less robust, and unsuitable for mass production."

Then, once they're in the patent pool, they become anti-competitive: suing any upstart that tries to innovate and is not a member of the patent pool. So, effectively, rather than innovating, they use the patent pool to block any competition. Finally, once the patent pool is in place, the companies involved decrease their own pace of innovation, because they've basically just blocked out the competitors. Thus, they don't need to keep innovating at the same pace.

None of this is really that surprising. It fits with much of the other research we've seen over the years concerning patents. The core problem, once again, is confusing innovation (finding something that the market actually wants in a way that it wants it) with invention (coming up with something new). When you get a patent, or set up a patent pool, what you're effectively doing is declaring a stop on any incremental improvements above that. It ignores the fact that real innovation is an ongoing and never ending process of improvements and tweaks, often made by others. But, in blocking out the ability of others to make those improvements -- those real innovations -- you slow down, drastically, the pace of innovation. In the end, a patent pool is just like a bigger patent, and has the same negative impact on innovation, just on a larger scale.

That's not to say there weren't some benefits from the patent pool -- but they seem quite narrow and extremely limited. There was an increase in patenting right before the patent pool was established (basically, as companies scramble to get included in the pool). But, it's difficult to say if that's actual innovation or just coming up with something that will get them in the pool. It did mean that members of the pool faced many fewer infringement lawsuits as defendants. It meant they were able to block out competition. But, of course, none of those things are what the patent system is supposed to encourage.

from the this-won't-help dept

Google, Verizon, HP, Cisco and some others are apparently teaming up to put money towards buying patents to keep them out of the hands of patent hoarders who would turn around and sue them. This isn't a new concept, and has been tried before -- and it didn't help much. The problem is that many of the worst patent suits aren't from "known" patents, but someone claiming a patent on some minor feature that everyone thought was obvious. Also, this type of action only encourages more bad patent activities by adding another buyer to the market. Now, questionable patent holders will recognize that they can also just sell to this patent pool, rather than selling to some patent hoarding firm. This is one of those ideas that sounds good on paper, but will have little to no effect on slowing down or stopping bad patent lawsuits, and may actually encourage more of that activity.

from the somebody's-missing.... dept

There are some folks who believe that the solution to patent problems is to just have everyone who claims to have a patent on a certain technology throw it into a "patent pool" and then those who use the technology pay up a fee that gets divided up among pool members. It sounds nice, but in practice, it almost never works. Setting up a patent pool actually encourages the wrong behavior: it encourages plenty of other patent holders to claim they deserve to be a part of the pool, and if they're not included, they start suing like crazy. Also, it encourages companies to try to get any kind of patent that might get them included in a pool, leading to all sorts of crazy claims. It's the exact opposite of the type of behavior that should be encouraged.

So, don't read too much into the fact that a bunch of companies in the WiMax space have agreed to put together a patent pool under the amusingly inaccurately named "Open Patent Alliance." The companies involved, Cisco, Intel, Samsung, Sprint, Alcatel-Lucent, and Clearwire are all betting big on WiMax deployments, so they know it's in their best interest to get the licensing out of the way. But you'll notice that there are a lot of companies missing -- including Wi-LAN who has been claiming that it owns all the key patents over WiMax technology for years. The patent pool sounds nice, but it's certainly not going to diminish the number of patent lawsuits that arise over WiMax technology. If anything, it's just going to make all those other companies even angrier.

from the just-wait-and-see dept

I've been seeing a few folks take the news that a bunch of big telco firms looking to get into the LTE (Long Term Evolution) market have agreed to form a patent pool. Some are even suggesting that this is exactly how the patent system should work. That's wishful thinking at best. LTE is the next generation of wireless technology that many telcos around the world are adopting as their choice for "4G" technology -- and it will be important. However, don't think that just because some companies have agreed to pool patents that it's a good thing. There have been plenty of patent pools in the past, and you can bet that one of two things is likely to happen. First, some other company (or a few other companies, and almost definitely some individual patent holders) will spring up at some point with yet another patent, claiming that LTE technology infringes on that patent and all these firms owe a ton of money. And, given how so many patent holders don't believe in apportioning damages, they'll even claim to want more than all the money being spread around in the pool itself.

But, much more to the point, the fact that so many patents need to be "pooled" just to offer this technology should be a pretty clear warning sign that the patent system isn't working as intended. Basically, what you have here is a patent thicket. Many of the patents in question are overlapping patents that never should have been issued. However, given all the uncertainty around patent litigation (and how the courts will be treating patent issues), most of these firms realize it's better to agree to split the pie rather than sue. That's still not a good result, because it only encourages more companies to suddenly push for these sorts of marginal and totally unnecessary patents just to get included in future patent pools -- even if their "invention" really adds nothing to the technology. Furthermore, this patent pool will automatically increase the price of all LTE technology, making sure that adoption is slowed down. So, yes, it's better to see a patent pool created than to see everyone just jump to lawsuits, but the history of patent pools is littered with additional lawsuits and companies having to pay for patents that they shouldn't be paying for. This is hardly a "good" solution -- it just encourages the bad system to get worse.